Renewal Community Employment Credit

The Renewal Community Employment Credit is an incentive to businesses that are located in an renewal community (RC) to hire and retain employees who also live in the RC. Businesses are eligible for a wage credit of up to $1,500 per eligible employee.

Renewal Communities are distressed urban and rural areas nationwide that are in need of revitalization. The Renewal Community Initiative brings communities together through public and private partnerships to create the investment necessary for economic development. The Federal government assists these targeted communities by providing tax incentives, grants, loans and technical assistance.

The credit is 15% of the qualified wages paid during a calendar year, up to $10,000 per employee. Both newly hired and current employees are eligible. The credit is renewable each year, and there is no limit to the number of employees a business can claim, as long as each employee lives in the RC. Both full time and part time employees may qualify.

Qualifying wages do not include any wages used in applying for either the Work Opportunity Tax Credit or the Welfare-to-Work Tax Credit. Also, the $10,000 maximum qualified wages for the Renewal Community Employment Credit will be reduced by any wages used to figure other tax credits for an employee.

Claiming the credit: The Renewal Community Employment Credit is claimed on a company’s federal tax return using IRS Form 8844 (PDF), Empowerment Zone Employment Credit.

Businesses can find more information about the Renewal Community Employment Credit in IRS Publication 954 (PDF), Tax Incentives For Empowerment Zones and Other Distressed Communities.

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